ADP Benefits Question

[LFC]

Hello Fellow Insurance Agents,

I have an issue and I am hoping some of you will have some good information for me. I wrote a group in June and they currently have 70 employees.

The corporate office is in California and my agency is also in California.
The company has some out of state EE's in Texas and may be hiring in Arizona. Employees out of state are not happy because they are not offered an HMO option like the employees in CA.

My research shows that it is very difficult to have HMO coverage for out of state employees unless you have a separate EIN and wage report in that state. Thus a completely separate policy. The employer does not want to do this.

Now the ADP question, the HR Admin contacted me and said ADP is their payroll company. They were told that because ADP is nationwide and if the employer uses them for their benefits they will have more plan options out of state, including HMO's. They will continue to have composite rates. Even in 2016 when the mid size groups change to the small group rating system.

Is this a true statement? I went on ADP's website and it looks like they now are partnering with brokers. Are you aware of any broker that has actually partnered with ADP?

Thank you for responding.

 

[scagnt83]

Never partnered with but have competed against. It is a PEO platform so yes, they would get composite rates. The PEO charges fees based on a % of payroll (at least when I competed against them they did). That works well for blue collar but not so much for white collar. They will have more options for plans, but less options for carriers. Especially when it comes to supplemental benefits and 401k... it will likely be a single option with those parts.

 

[LFC]

Never partnered with but have competed against. It is a PEO platform so yes, they would get composite rates. The PEO charges fees based on a % of payroll (at least when I competed against them they did). That works well for blue collar but not so much for white collar. They will have more options for plans, but less options for carriers. Especially when it comes to supplemental benefits and 401k... it will likely be a single option with those parts.

Thank you very much for responding. Do you believe that they only offer the PEO option and not just employee benefits like a regular brokerage would offer? Maybe the PEO option is the only way to go with out of state employees wanting HMO's.
Fees based on % of payroll sounds crazy and that is an important fact to find to look into. Thanks again

 

[scagnt83]

Thank you very much for responding. Do you believe that they only offer the PEO option and not just employee benefits like a regular brokerage would offer? Maybe the PEO option is the only way to go with out of state employees wanting HMO's.
Fees based on % of payroll sounds crazy and that is an important fact to find to look into. Thanks again

They have both. But they push the PEO heavily. And if they are pitching composite rates to a group that is not large enough for composite rates on their own, then they are pitching the PEO. Even the "regular" benefits side is not a true brokerage from what I understand. They have just a small selection of "preferred" carriers.

I am not sure how the out of state thing affects HMOs. I do not recommend HMOs so someone else will have to field that questions.

For the PEO the fees are calculated on a percentage of payroll. It can work well for a blue collar firm who has high workers comp insurance and low payroll. But for a white collar firm who has low workers comp and a high payroll it makes no sense at all from a financial standpoint.

 

[Coastalins]

Thank you for your response. This is a 70 EE group of engineers. Their main issue is not having the same plans offered in all states.

I thought that part of the ACA mandate was the ability to cross state lines and offer like plans.
Maybe I heard that wrong or it was put on hold.

In Ca 51 to 99 EE groups will be considered small group as of Jan 2016. Back to age rated from composite. What a mess that will be!

 

[EugeneM]

You would have to get a carrier in their state with HMO options to review their payroll and offer some plans.

Lets say they got 12 employees out of state a separate offering can be made base on that payroll.

 

[mkd1204]

Hello Fellow Insurance Agents,

I have an issue and I am hoping some of you will have some good information for me. I wrote a group in June and they currently have 70 employees.

The corporate office is in California and my agency is also in California.
The company has some out of state EE's in Texas and may be hiring in Arizona. Employees out of state are not happy because they are not offered an HMO option like the employees in CA.

My research shows that it is very difficult to have HMO coverage for out of state employees unless you have a separate EIN and wage report in that state. Thus a completely separate policy. The employer does not want to do this.

Now the ADP question, the HR Admin contacted me and said ADP is their payroll company. They were told that because ADP is nationwide and if the employer uses them for their benefits they will have more plan options out of state, including HMO's. They will continue to have composite rates. Even in 2016 when the mid size groups change to the small group rating system.

Is this a true statement? I went on ADP's website and it looks like they now are partnering with brokers. Are you aware of any broker that has actually partnered with ADP?

Thank you for responding.

Definitely a PEO.. So yes they have more options but a PEO also has some fees that can drive up cost....

I have alot of groups with multi state employees. You have to just tell them the deal and try your best to make the plans equal. Most of ours just have a nationwide option for those employees. Others just increase their pay to match what they are contributing to in state employees. It's taxable to the employees, but then they can just buy an individual plan from their home state.

 

[Coastalins]

Thank you for your reply. It appears to me that the only way to cover the out of state employees with an HMO is through a PEO. Most likely through a payroll company like ADP.
I see ADP does work with brokers, but at what capacity?

 

[beachgal]

Thank you for your reply. It appears to me that the only way to cover the out of state employees with an HMO is through a PEO. Most likely through a payroll company like ADP.
I see ADP does work with brokers, but at what capacity?

I would call your carrier reps to find out your options. A PEO may not be your only avenue. If you feel it is, then find a PEO broker and compete against ADP. A PEO broker will relieve you from any volume commitments. If need help, let me know.

 

[LFC]

I would call your carrier reps to find out your options. A PEO may not be your only avenue. If you feel it is, then find a PEO broker and compete against ADP. A PEO broker will relieve you from any volume commitments. If need help, let me know.

Hi Beachgal, Are you in California? I didn't think about a PEO broker. Please clarify, where would I find a PEO broker to partner with? Didn't know this was an option, other then payroll companies and I don't think they want to partner with brokers. I have looked high and low and it looks like my only option to offer an HMO in another state is to set up a separate entity based in that state. The group would rather not do this. Thank you for your response.

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Definitely a PEO.. So yes they have more options but a PEO also has some fees that can drive up cost....

I have alot of groups with multi state employees. You have to just tell them the deal and try your best to make the plans equal. Most of ours just have a nationwide option for those employees. Others just increase their pay to match what they are contributing to in state employees. It's taxable to the employees, but then they can just buy an individual plan from their home state.

Thank you MKD,
Yes, I have explained this to the group, but they use ADP and the ADP rep is enticing them with the PEO option. Especially if they have to go back to small group next year and age rated premiums. They just moved to composite rates and don't want to go back to the old rating system. Thank you for your response.